Have you seen the preview for <a href="https://www.youtube.com/watch?v=cSp1dM2Vj48>Ready Player One? </a> Did you virtually drop into Intel’s booth at the 2018 Consumer Electronics Show using SANSAR’s technology? They hung out at MetLife Stadium around the 15 minute mark in <a href="https://www.youtube.com/watch?v=h7eBFMfZa_I>this video. </a> These are harbingers of how close the world is to realizing NBA Commissioner Adam Silver’s 2015 prediction that the NBA would someday be offering a courtside NBA experience to remote fans (advance <a href="http://www.sloansportsconference.com/content/sharing-liking-streaming-the-future-of-sports-and-media/>to 31 minute mark</a>).

As the sports world embraces AR as both a primary content provider and enhanced experiential platform for live sports, VR is an ideal venue for fans to gather together and enjoy that content. Jason Gholston, Product Director at Linden Lab said their SANSAR platform, and communities like Second Life built upon it, are well suited for sports fans to replicate the social aspect of connecting around their shared passions, gathering to watch their teams compete live. It is easy to envision users building out their “man caves” and home theaters, complete with 180-degree viewable screens, in team colors and themed décor. “The great thing about getting together in VR, is that fans are not limited by parameters of geography, time zones, cable providers, et cetera, when finding ‘their people’ with whom to watch their favorite team play in a big game. Hanging out in VR to watch the game in AR makes the world a whole lot smaller and brings many more people right into the stadium or arena than the actual capacity.”

The VR community side of SANSAR has given rise to Second Life, to date the largest user created virtual world. According Gholston, $600m USD was exchanged in the Second Life economy in 2017. This included transactions such as purchases from virtual furniture makers and virtual clothing boutiques as creators and users built out their environments and outfitted their avatars. While most of those transactions were user-to-user, Gholston said approximately $60m was cashed out last year by vendors and designers. Gholston went on to say that the opportunity for the sports industry, endemic and adjacent businesses alike, to monetize AR and VR is only beginning to be explored. This is true for traditional sports content and experiences and the exploding eSports vertical.

At the 2018 MIT Sloan Sports Analytics Conference last month, Jonathan Kraft, President of the Kraft Group, reinforced Gholsten’s assertions. “AR is something that over the next five years will be put to work in venues in a way… that will help enhance the real world experience whether you are in venue or not.” Wyc Grousbeck, CEO and co-owner of the Boston Celtics, on the same SSAC panel, spoke to the Celtics’ ongoing development of AR content for fans in the TD Garden, including real-time enhanced video and statistics.

Beyond traditional sports, eSports is a natural partner for the VR community. Already encompassing a significant virtual community through digital broadcasts, which can draw live audiences to championships that rival viewership of the NBA Finals, the global eSports fan base are also participants. According to a 2017 Nielsen survey, eSports enthusiasts across the US, UK, and Europe spend an average of 2.4 hours a week watching eSports and 8.2 hours a week playing eSports. League of Legends and Call of Duty boasted a combined 128 million players worldwide as of the third quarter of 2017. Business Insider reported last year’s IEM world championship drew 340,000 peak concurrent viewers to its 360-degree immersive VR broadcast, which included real-time scoring and stats, and a replay option.

Not surprising, for both the supporters and skeptics of the exploding eSports vertical at the Sloan Sports Analytics Conference, revenue was a recurring topic. The bulls (Ted Leonsis and Jonathan Kraft, for example) believe that just the tip of the revenue iceberg has been exposed as this point. Pointing to evidence such as audience engagement, league structure, investment in teams, “unfair” revenue split (currently heavily favored to the players), lack of merchandise sales, and whatever else they are keeping close to the vest, they clearly see the white space and odds are they are working diligently to fill it. The bears, such as Gerry Cardinale of RedBird Capital Partners, are much more cautious. “I am not as convinced. It is hard for me to see an entry point that works the same way as the model that has worked for me over the last 25 years. If I look at the value chain in eSports, it is hard for me to see an entry point where I can invest with the kind of risk-adjusted profile that I would expect.” To be clear, these are not non-believers. These are industry veterans taking a wait-and-see approach. As Josh Harris, principal owner of the Philadelphia 76ers, elaborated, “It’s an emerging field. It’s an evolving business model… you have to look hard at how you play in eSports, even beyond teams. There’s a whole ecosystem of social media, of apparel, of a whole bunch of other things. It’s an emerging area; none of the eSports businesses are profitable right now. All of them lose money. All of them are venture funded or funded by cash flow through somewhere else. At the same time, the audience potential creates a willingness of people to invest.”

Looking forward, the massive capital investments into both eSports and AR/VR technology platforms will give rise to quite a few high-value new businesses. Whether current goods and service providers adapting to the new platform, or entrepreneurs creating new businesses specifically to cater to specific constituents, the development will happen quickly, it will be high value, and it will be nontraditional.

In August 2017, The International Dota 2 Championship awarded over $24 million in prize money – at the time the largest eSports prize pool in history – and it was crowd sourced through an in-game add-on purchased by some of the 105 million people who play Dota 2. It is this same ingenuity that will propel rapid growth of new business and revenue streams across the VR/AR spectrum. Those who can best integrate them with the existing traditional sports value chain will capture the premium real estate in this new frontier.